1) Field of the Invention
The present invention relates to financial data processing and business practices regarding funds transfer. More specifically, the present invention provides a personal payment number (PPN) wherein an individual or business can receive payments from other individuals or businesses without revealing confidential account information or establishing themselves as a credit/debit card accepting merchant.
2) Brief Description of Related Art
With the increasing globalization of commerce the need for safe and secure ways to make payments between individuals, businesses and merchants now extends to systems that provide global coverage and include currency exchange systems. In addition there is a need for these systems to be secure and also to be trusted by all parties.
Existing systems such as systems based on bank checks or bank transfers involve either the payer or the payee revealing details about their bank account to at least the other party. For instance, the recipient of a check sees the payer's bank account and routing information on the check, and with a bank transfer the recipient/payee must provide their account information to the sender/payer. In a global situation where the two parties may have never have met, sharing of such information may be sufficient cause for concern to deter one or other party from proceeding. Also, different checking and bank transfer systems can reduce the effectiveness of the financial transaction.
The global credit/debit card system provides an ideal mechanism for receiving payment but under normal circumstances requires the recipient to be a credit card accepting merchant. Being a credit card accepting merchant may not be cost-effective for some people or businesses wanting receiving payments. Also smaller merchants without a good trading history may have difficulty in being accepted by credit card acquiring banks as credit card accepting merchants.
The ability to receive funds using a simple, rapid and secure system without the need to be a formal credit card accepting merchant will be of benefit to a wide range of users. For example the rise of online auction services (such as those developed by eBay and Amazon) means that many individuals may occasionally require a means of receiving funds remotely, such as over the Internet. Also, the widespread “shareware” software distribution system provides a mechanism for software written by individuals to be distributed on a global basis. Shareware authors are generally individuals that do not have the organizational support to handle global payments. Therefore a system that can provide a global payment solution with no administrative overheads with automatic currency conversion would be very attractive to these as well as many other users.
In the growing global electronic commerce environment many individuals and companies may offer their service remotely over the Internet or other public, semipublic or closed network. Such services (programming, translation, writing, clerical, accounting, web-page design, etc) will typically be provided remotely and not require any direct physical interaction between the provider of the service and the service user. The two parties to such an arrangement may never have met raising the issue of mutual trust. In addition they may be in different countries and this produces problems for currency exchange or incompatibility of bank transfer systems as well legal challenges if a non-payment dispute arises. Again a simple, rapid global payment solution would be of benefit.
The need and value of such a service is indicated by the number of systems that have already been proposed to address this issue. Examples of systems operating within this area include:
BillpointThis service acts as an intermediarybetween payers and payees, requiringboth to sign up to the system. It isoperated as proprietary system and isdesigned for application in the on-lineauction house arena.PayPalThis system is another intermediaryclosed system where the payer registerswith PayPal and provides credit card orbank account details. When the payer wantsto make a payment he transfers money toPayPal and an email is sent to the emailaddress of the recipient with message thatsomeone has sent you money. The recipient mustthen register to receive the funds byaccount transfer or refunded onto aconventional credit card number.PaymeThis system sends email bill to usersthrough the Payme site (payee registerswith “Payme”), email goes out witha request for payment. The payer pays Paymewho transfers the funds to payee.eMoneyMailIn this system the payee goes the eMoneywebsite and pays with credit/debit/accounttransfer and gives the email address of therecipient. The recipient receives an email witha link back to the eMoney site where they canreceive the funds by transfer to a checkingaccount or credit card.Wire-transferThe provider offers a range of services offeraccount to account wire transfer such asWestern Union and Swift.CheckfreeThis system is an example of a bill payingsystem which requires both parties to beregistered with the system.
In many of the above systems the recipient must give either a credit/debit card number or bank account number to a third party (payer or other intermediary). In the case of using a credit/debit card, the payment is made by initiating a “refund” transaction even though there was no matching initial payment since the payment was made another party. There are two key problems with using this refund mechanism:
(1) Within the current card systems (such as Visa, Mastercard and Europay) there is the problem of reverse interchange. This is the process whereby a refund leads to the customer's bank (i.e., the bank who issued the credit card that is being refunded) paying back to the merchant acquiring bank (i.e., the bank that received the refund request from a credit card merchant) the interchange fee (effectively a commission) that would have been kept by the customers bank on the original payment. Since no original payment has been made in the scenario where someone is receiving money from a third party, the customer's bank (i.e., the bank who issued the credit card that is being refunded) is effectively being charged for the transaction at a cost of approximately 1.5% of its value depending on the prevailing interchange rates for the specific credit card. Under the current credit card systems, trying to change the rules for refunds to address this issue will lead to the converse problems in true refunds.
(2) In order to receive funds a user must reveal his or her actual credit card number. These details have the potential to be misused creating worry, inconvenience and potentially financial cost for the recipient. In the case of Internet payment systems, this information is then potentially stored on a server connected to the Internet. As recent fraud scares have indicated, storage of personal details in computer databases linked to the Internet represents possibly the most vulnerable security weakness with Internet based credit card transactions.
In addition, with several of above the above Internet payment services, the recipient receives an email notifying them that someone wishes to pay funds to them. The recipient then follows a link in the email to a site where he/she must enter their credit or bank account details to receive the funds. Clearly a fraudulent message offering a prize, a non-existent payment, etc., could easily lead to innocent victims giving over their credit card details which could then be misused by the perpetrator of the fraud.